DALLAS, TX, Aug. 27, 2014 /CNW/ - Gale Force Petroleum Inc. (TSXV: GFP) (OTCQX: GFPMF) ("Gale Force" or the "Company") today announced that it has concluded the sale of an 81% working interest in its properties in Henderson and Anderson Counties, Texas (the "Texas Reef Properties") as well as its 90% interest in a 4-mile natural gas gathering system on the properties, for an aggregate selling price of US$5,850,000. Per the terms of the purchase and sale agreement, US$567,000 of the purchase price will be held in escrow for sixty days following closing, or longer, if there are any title or environmental issues to be resolved.
The Company has retained an average 12% working interest plus a 3% overriding royalty interest in its existing four producing wells on the Texas Reef Properties, and an average 9% working interest plus a 5% overriding royalty interest throughout another 3,500 undeveloped net acres.
The purchaser, an experienced, well-capitalized private E&P operator with operations in several states in the Southern USA, has taken over as operator of the Texas Reef Properties.
"The Company will benefit from the new operator's experience drilling and operating in the area, while participating in the upside with its retained interests," said Michael McLellan, Chief Executive Officer. "Also, the Company has made significant debt repayments and freed up capital for investment in core properties."
With the proceeds of the sale, the Company has repaid US$3,000,000 of its senior bank facility. The borrowing base of the facility is now $1,750,000 and the maturity date has been extended to January 1, 2016. Also, the next date for a borrowing base redetermination will be January 1, 2015, at which time it will be determined if monthly borrowing base reductions are needed. The facility is currently an interest-only facility, with an interest rate that remains unchanged at 5% per annum.
The Company also repaid all other subordinate notes, including the seller's note issued upon the purchase of Texas Reef interests announced on February 26, 2014, which had an outstanding balance of US$350,000, the bridge loan to Primatlantis Capital, which had an outstanding balance of US$255,000, and the note payable to Iroquois Capital Opportunity Fund, which had an outstanding balance of CA$33,000.
Further to the announcement made on August 18, 2014, the closing of the Thunder Properties sale has been delayed. The Company expects to announce a revised closing date in the near future.
ABOUT GALE FORCE PETROLEUM INC. − www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on acquiring and exploiting underdeveloped oil and gas reserves in mature basins, bringing operational expertise and capital to lower-risk, development-type projects. The Company currently owns producing oil and gas properties in Texas, Tennessee and West Virginia.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Gale Force Petroleum Inc.